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> The Justice Department’s suit said Visa’s chief executive called the acquisition an “insurance policy” to neutralize a “threat to our important U.S. debit bus

> The Justice Department’s suit said Visa’s chief executive called the acquisition an “insurance policy” to neutralize a “threat to our important U.S. debit business.” Whoooops! To all CEOs whether its China or the United States, if you want to make some value for shareholders: Shut the fuck up, forever!

hn_throwaway_99 6y ago
Yeah, when it comes to business, the definition of "gaffe" is to tell the truth.
MaxwellM 6y ago
Also maybe, try to innovate instead of suffocating innovation with a pillow stuffed with cash.
- deleted 6y ago
  [deleted]
- toomuchtodo 6y ago
  US debit business is likely replaced with Fed instant payments in 2-3 years [1] (the core functionality is approved and building has started [2]). Can't innovate your way out of a central bank replacing your product. You're only left with uncompetitive business options to hold onto your regulatory capture as long as possible. Plaid exists because the US hasn't mandated financial API access like Europe did with PSD2. Regulatory requirements to support this would negate the need for "innovative" startups. EDIT: Real Talk, these networks should not be taxing economies percentage points of total payment volume [3] (again, Europe used regulation to cram down interchange fees to be more reasonable). These are legacy businesses that should be replaced with low cost utility-esq payment services such that the Fed is doing (and already exist in most first world countries [4]). [1] https://www.bankingdive.com/news/fed-gives-new-details-on-its-real-time-payments-system/583153/ https://www.bankingdive.com/news/fed-gives-new-details-on-it... [2] https://www.federalreserve.gov/newsevents/speech/brainard20200806a.htm https://www.federalreserve.gov/newsevents/speech/brainard202... [3] https://theweek.com/articles/850232/why-are-all-paying-tax-credit-card-companies https://theweek.com/articles/850232/why-are-all-paying-tax-c... [4] https://en.wikipedia.org/wiki/Instant_payment#Examples_of_instant_payment_services https://en.wikipedia.org/wiki/Instant_payment#Examples_of_in...
  - ballenf 6y ago
    I'm sure there will be lucrative contracts to be had by banks in that scheme. Just like electronic tax filing and ACA health plans.
    - toomuchtodo 6y ago
      I'm not so jaded yet to believe that it won't be an improvement over the status quo. YMMV. Get involved (I am, and submit comments to the Fed and contact reps on the U.S. House Committee on Financial Services). Be the squeaky wheel, do some bureaucracy hacking. Communications and relationships with representatives is some of the greatest leverage you'll ever have. Success is not assured, but constant vigilance is mandatory.
  - runako 6y ago
    > these networks should not be taxing economies percentage points of total payment volume I agree, but what value do you place on the insurance aspect of credit-card payments? There are definitely vendors I only buy from because I know I can call Citibank if they screw me.
    - toomuchtodo 6y ago
      "Let merchants charge customers the credit transaction fee as a surcharge [1] [2], and let consumers pay to receive the benefits if they so desire. Everyone else can use debit cards now, and instant payments when they arrive in 2023-2024 [3] [4]. If it's transaction insurance customers demand, let them vote with their dollars (versus mandating everyone pay it as a transaction tax)." Therefore, if you value the insurance, you still should have access to it, but you should pay for it. Citations above are in my original comment on the topic: https://news.ycombinator.com/item?id=24899057 https://news.ycombinator.com/item?id=24899057
      - mchusma 6y ago
        To add to this, there is a big problem with the current structure of "insurance" as a flat rate for all consumers. The risk is shared between the business and consumer, as all legitimate businesses still have disputes and I know many consumers who "just disputed a charge" to not pay. My guess (based on watching data on 2 businesses for 10 years) is that 90% of the risk in the transaction is probably in the consumer (but hard to know for sure). This makes sense, because right now with a flat rate the "good customers" (who rarely disupte) subsidize the "bad customers" (who dispute a lot). It would be a bad idea for everyone got the same rate for car insurance, because it would promote bad behavior (since being a bad driver would be subsidized). Small businesses also get disproportionally hit with this issue. People are less likely to dispute a charge with Amazon (and lose access to its service) than the local store. So the bulk of the "cost" of insurance here is borne by small businesses and good customers.
prepend 6y ago
Or better yet, CEOs should not buyout competitors to eliminate threats.
- x3c 6y ago
  Why not?
  - prepend 6y ago
    Because it’s anticompetitive, bad for users, and sometimes against US law. Like when you’re as big as Visa.
  - steve918 6y ago
    Because it's the definition of anti-competitive actions.
  - amcoastal 6y ago
    Maybe a CEO "should" because it's good for them and their company, but a healthy market regulator "should not" allow those type of transactions, in general, for the good of market participants.
    - cle 6y ago
      I agree about your being specific about these types of transactions. At this scale, these things should be blocked. In healthier marketplaces, acquisitions can also improve the overall health of the marketplace by improving efficiency, output, etc., while maintaining competition. The interesting question to me in these discussions is, are there systemic changes we can make that would prevent these marketplace distortions from being possible in the first place, and what would be the negative tradeoffs? And are they politically feasible?
- vmception 6y ago
  well I mean, don't say that's why you are buying them out.
corobo 6y ago
Live footage of the emergency board meeting[1][2] [1] It's not really, this is a joke. [2] https://www.youtube.com/watch?v=_OSj4Xmgvu8 https://www.youtube.com/watch?v=_OSj4Xmgvu8
- vmception 6y ago
  This is probably more accurate than you know
pmiller2 6y ago
> Whoooops! To all CEOs whether its China or the United States, if you want to make some value for shareholders: Shut the fuck up, forever! Paging Elon Musk....

hn_throwaway_99 6y ago

Yeah, when it comes to business, the definition of "gaffe" is to tell the truth.

MaxwellM 6y ago

Also maybe, try to innovate instead of suffocating innovation with a pillow stuffed with cash.

deleted 6y ago
[deleted]
toomuchtodo 6y ago
US debit business is likely replaced with Fed instant payments in 2-3 years [1] (the core functionality is approved and building has started [2]). Can't innovate your way out of a central bank replacing your product. You're only left with uncompetitive business options to hold onto your regulatory capture as long as possible. Plaid exists because the US hasn't mandated financial API access like Europe did with PSD2. Regulatory requirements to support this would negate the need for "innovative" startups. EDIT: Real Talk, these networks should not be taxing economies percentage points of total payment volume [3] (again, Europe used regulation to cram down interchange fees to be more reasonable). These are legacy businesses that should be replaced with low cost utility-esq payment services such that the Fed is doing (and already exist in most first world countries [4]). [1] https://www.bankingdive.com/news/fed-gives-new-details-on-its-real-time-payments-system/583153/ https://www.bankingdive.com/news/fed-gives-new-details-on-it... [2] https://www.federalreserve.gov/newsevents/speech/brainard20200806a.htm https://www.federalreserve.gov/newsevents/speech/brainard202... [3] https://theweek.com/articles/850232/why-are-all-paying-tax-credit-card-companies https://theweek.com/articles/850232/why-are-all-paying-tax-c... [4] https://en.wikipedia.org/wiki/Instant_payment#Examples_of_instant_payment_services https://en.wikipedia.org/wiki/Instant_payment#Examples_of_in...
- ballenf 6y ago
  I'm sure there will be lucrative contracts to be had by banks in that scheme. Just like electronic tax filing and ACA health plans.
  - toomuchtodo 6y ago
    I'm not so jaded yet to believe that it won't be an improvement over the status quo. YMMV. Get involved (I am, and submit comments to the Fed and contact reps on the U.S. House Committee on Financial Services). Be the squeaky wheel, do some bureaucracy hacking. Communications and relationships with representatives is some of the greatest leverage you'll ever have. Success is not assured, but constant vigilance is mandatory.
- runako 6y ago
  > these networks should not be taxing economies percentage points of total payment volume I agree, but what value do you place on the insurance aspect of credit-card payments? There are definitely vendors I only buy from because I know I can call Citibank if they screw me.
  - toomuchtodo 6y ago
    "Let merchants charge customers the credit transaction fee as a surcharge [1] [2], and let consumers pay to receive the benefits if they so desire. Everyone else can use debit cards now, and instant payments when they arrive in 2023-2024 [3] [4]. If it's transaction insurance customers demand, let them vote with their dollars (versus mandating everyone pay it as a transaction tax)." Therefore, if you value the insurance, you still should have access to it, but you should pay for it. Citations above are in my original comment on the topic: https://news.ycombinator.com/item?id=24899057 https://news.ycombinator.com/item?id=24899057
    - mchusma 6y ago
      To add to this, there is a big problem with the current structure of "insurance" as a flat rate for all consumers. The risk is shared between the business and consumer, as all legitimate businesses still have disputes and I know many consumers who "just disputed a charge" to not pay. My guess (based on watching data on 2 businesses for 10 years) is that 90% of the risk in the transaction is probably in the consumer (but hard to know for sure). This makes sense, because right now with a flat rate the "good customers" (who rarely disupte) subsidize the "bad customers" (who dispute a lot). It would be a bad idea for everyone got the same rate for car insurance, because it would promote bad behavior (since being a bad driver would be subsidized). Small businesses also get disproportionally hit with this issue. People are less likely to dispute a charge with Amazon (and lose access to its service) than the local store. So the bulk of the "cost" of insurance here is borne by small businesses and good customers.

prepend 6y ago

Or better yet, CEOs should not buyout competitors to eliminate threats.

x3c 6y ago
Why not?
- prepend 6y ago
  Because it’s anticompetitive, bad for users, and sometimes against US law. Like when you’re as big as Visa.
- steve918 6y ago
  Because it's the definition of anti-competitive actions.
- amcoastal 6y ago
  Maybe a CEO "should" because it's good for them and their company, but a healthy market regulator "should not" allow those type of transactions, in general, for the good of market participants.
  - cle 6y ago
    I agree about your being specific about these types of transactions. At this scale, these things should be blocked. In healthier marketplaces, acquisitions can also improve the overall health of the marketplace by improving efficiency, output, etc., while maintaining competition. The interesting question to me in these discussions is, are there systemic changes we can make that would prevent these marketplace distortions from being possible in the first place, and what would be the negative tradeoffs? And are they politically feasible?
vmception 6y ago
well I mean, don't say that's why you are buying them out.

corobo 6y ago

Live footage of the emergency board meeting[1][2] [1] It's not really, this is a joke. [2] https://www.youtube.com/watch?v=_OSj4Xmgvu8 https://www.youtube.com/watch?v=_OSj4Xmgvu8

vmception 6y ago
This is probably more accurate than you know

pmiller2 6y ago

> Whoooops! To all CEOs whether its China or the United States, if you want to make some value for shareholders: Shut the fuck up, forever! Paging Elon Musk....